BAE coughs another $79m over US war-tech violations

US-centred but UK-controlled weapons globocorp BAE Systems plc has reached a civil settlement with the US State Department regarding violations of American arms-technology export laws. Under the deal announced today the firm will pay a fine of $79m, up to $10m of which may be spent internally on enhanced compliance measures.

The State Department is in charge of implementing the US International Traffic in Arms Regulations (ITAR), and investigations leading to today's settlement were triggered by a previous deal with the US Justice Department, who were after BAE over allegations of bribery in various export deals. BAE has been permitted to buy up a large part of the US defence sector over the last decade and more (it now has many more American employees than Brits), and as part of this process the company agreed that its non-US operations would act as though they were subject to US bribery laws.

Following the Justice investigation, BAE admitted that it had broken this agreement, and paid a fine of $400m (plus another of £30m to the UK authorities over violations associated with a radar deal in Tanzania).

However, the Justice bribery investigation also uncovered apparent breaches of the ITAR arms-tech controls. US District of Columbia court documents supplied to the Register at the time stated:

With respect to the lease of Gripen fighter jets to the Czech Republic and Hungary, and sales of other defense materials to other countries [our emphasis] BAE Systems caused the filing, by the applicant, of false applications for export licenses of US Munitions List defense materials and the making of false statements to the Directorate of Defense Trade Controls...

This has led to the State Department process now concluded and the further fine announced today.

In addition to the fine, BAE says that:

A limited number of the company's UK-originated export programmes will be subjected to enhanced administrative review, which is not expected to adversely impact the company's current or future export programmes. The Company will also make additional commitments concerning its ongoing compliance.

Almost all modern, Western-made military hardware includes significant amounts of US technology subject to ITAR, even if it appears at first sight to be made outside the States. Examples include the Eurofighter Typhoon – which BAE is keen to export widely – and the Swedish Gripens, which BAE was engaged in marketing to Eastern Europe.

BAE chairman Dick Olver commented in a tinned quote included in the announcement:

"Last year the Company reached a settlement with the US Department of Justice concerning historical violations of US defence export control regulations and this settlement with the State Department arises in connection with its parallel civil jurisdiction ... The Company looks forward to working with the State Department to ensure that it continues to make progress towards achieving its goal as being as widely recognised for responsible conduct as it is for high quality products and advanced technologies." ®